Asian Currencies Under Pressure

Asian Currencies Under Pressure by Andrew Blumer last updated on January 13, 2024

Asian Currencies Under Pressure Amid A Stronger Dollar

Most Asian currencies were on the back foot during Monday's session. At the same time, the greenback enjoys multi-week highs on account of a strong NPF report.

In addition, the bets on rate cuts have also hit a new low, putting the Asian FX under pressure. Now that the NFP is out of the way, the critical data that investors await is the CPI reading.

Most regional currencies from Asia also registered losses during the Friday session. Even Monday appears not so good for the Asian FX as the greenback demand continues to rise.

64% Odds Of March Rate Cut

According to the CME tool, the odds of March's 25 bps rate are now hovering at 64%, while last week's data showed 74%.

Most experts hint at increased inflation if we talk about the upcoming CPI. If this is accurate, it would be bad for those seeking lower rates.

look at the Asian currencies shows a +0.1% change in the JPY, which is a good sign given the poor performance of other currencies.

While the JPY was a rare exception, most Asian currencies lost against the greenback. For starters, the Yuan registered a -0.2% loss amid a weak sentiment regarding the Chinese economy. Some experts say China's inflation readings will likely decrease in December.

Indian Rupee also defied the trend and jumped by 0.1% after intervention by the central bank. Furthermore, Singapore's Dollar and the Won from South Korea also registered a 0.1% change.

The bottom line is that the prospects of early rate cuts are affecting the performance of the Asian currencies. At the same time, the interest rate offered by the USD is at historic highs, which makes other currencies less attractive.

According to one expert, the appreciation of the USD against the Asian FX basket will likely continue during the first few months of 2024.